Quantifying Welfare Impacts of Air Pollution in Seoul: A Two-Stage Hedonic Price Approach

Myung-Jin Jun ()
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Myung-Jin Jun: Department of Urban Planning and Real Estate, Chung-Ang University, Seoul, 84 Heukseok-ro, Heukseok-dong, Dongjak-gu, South Korea

Journal of Environmental Assessment Policy and Management (JEAPM), 2018, vol. 20, issue 02, 1-25

Abstract: This study aims to measure welfare loss due to the high pollution levels of PM10 and NO2 in the Seoul metropolitan area (SMA), Korea, which do not comply with the international standards, using spatial hedonic price models with apartment sales and air pollution data in 2010. The major findings were as follow: First, spatial hedonic model estimation reveals statistically significant negative signs for air pollution index for all submarkets, empirically presenting a trade-off between air pollution level and housing values. Second, the own-good quantity variable (air pollution index) has a statistically significant negative coefficient, indicating a diminishing marginal willingness to pay (MWTP) for additional level of the air pollution. Third, a worsening air quality brings about a substantial amount of welfare loss ($26.3 billion) among households residing in the SMA.

Keywords: Air pollution; spatial hedonic model; welfare loss; demand function (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S1464333218500060

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